When life and misunderstanding get in the way of taking out life insurance

Royal Commissions, inquiries and investigations have resulted in scores of negative headlines about the financial services industry. While the tide is starting to turn and the industry seeks to rebuild trust, it would still be reasonable to think that, as a new life insurance company, customer distrust would be the biggest battle we, and the advisers we work with would face when communicating the importance of life insurance. So, we asked advisers what their customers are saying – and the results were surprising.

When the advisers we work with spoke to everyday people about the obstacles that prevent them from having adequate life insurance, the answers were varied. We found understanding of life insurance is low and confusion is high. Very high. We heard people often don’t see their income as an asset until its converted to something they can see and touch. Some also thought they might have life cover through their superannuation as this rings a distant bell about something they signed, somewhere, some time ago. Most worryingly, others think health insurance will be their saviour should they need TPD cover. This lack of understanding leads many to thinking life insurance is just not necessary.

We heard from advisers that some people relegate life insurance to the “graveyard” lists of things they hope to do, but in reality it’s the place where tasks go to die rather than get done. This is the “too hard basket” or the “too complicated basket” or the “takes too long basket”.

Advisers confirmed to us that most people are convinced they are not going to die suddenly, unlike all of those other people who die suddenly. They plan to die with adequate notice and therefore plenty of time to update their life insurance (and the playlists of songs they really want at their funeral).

Working at Integrity Life means I have no excuse not to have life insurance as I see the value day in, day out. For other people a major milestone will serve as a trigger or sometimes a tragic story will spur people to act and take out life insurance. Knowing their family will be taken care of often shifts people into action and moves insurance up the list.

Life insurance is being made simpler with technology that helps advisers to explain things like premiums and coverage. We are leading this new wave of simplicity that will help advisers to demonstrate value of life insurance. Getting this right is key to protecting people and their families and reducing underinsurance.